Finance
Kenya Lowers Rate to Stimulate Growth
- Kenya Lowers Rate to Stimulate Growth
In a bid to stimulate growth and deepen economic productivity, the Central Bank of Kenya led Monetary Policy Committee lowered interest rate by 50 basis points to 8.50 percent on Monday.
It was the first time the East African nation will lower interest rates in more than a year.
“The Committee noted the ongoing tightening of fiscal policy and concluded there was room for accommodative monetary policy to support economic activity,” the bank said.
The decision was against analysts’ projection that policymakers will keep the rate at 9 percent, the same rate it has been since the end of July 2018.
The central bank had lifted the limit on commercial interest rates earlier, saying it stifled credit growth and impede productivity.
“This reform should restore the clarity of monetary policy decisions and strengthen the transmission of monetary policy,” the bank said on Monday.
“I think the MPC was largely emboldened by the repeal of the interest rate capping law,” said Jibran Qureishi, an economist for East Africa at Stanbic Bank.